According to purchasing-power parity, if the dollar price of oil is higher in Toronto than in London, arbitrageurs will _____ oil in Toronto and _____ oil in London to drive _____ the price of oil in Toronto.
A)buy; sell; up
B)buy; sell; down
C)sell; buy; up
D)sell; buy; down

Question

Quizplus · Accepted Answer

Arbitrageurs will sell oil in Toronto where the price is higher and buy oil in London where the price is lower, which will drive down the price of oil in Toronto due to increased supply.

According to Purchasing-Power Parity, If the Dollar Price of Oil